In this commentary to the Gulf Intelligence, Dr Carole Nakhle, CEO of Crystol Energy, discusses the latest developments in global oil industry.
The market seems to have found a new upward direction over the past week, largely related to the data publication from IEA, EIA and OPEC, all upgrading their forecasts for oil demand, but also in the inventory drawdown seen in the US. While, so far, most of the positive economic data has concentrated on the US, the largest global economy, positive spillovers are expected on its trading partners as well.
We also started to finally see improvements in Europe’s vaccine program, but still not up to speed with the UK and the US. We must remain cautious for the coming months because the pandemic is not quite under control and we will see an uneven recovery, geographically speaking.
On inflation and whether monetary policy makers have pushed the worries away, we should bring different time frames into perspective. The longer term we look into, the more the inflation risk and other scars from the pandemic might re-emerge, thus affecting the economic growth. Inflation is still a worry for many market observers today, but it seems to have tamed down from a month ago – although the conversation might still be brought back into the picture. We should also consider the correlation between oil prices and cost trends. High oil prices can sometimes attract the taxman and the industry could be at risk as governments look for ways to generate income.
Dr Nakhle is joined by Jorge Montepeque, President, General Index, and Vladimir Langhamer, Managing Director, Supply & Trading, OMV. Sean Evers, Managing Partner, Gulf Intelligence, moderates the discussion.
Watch the full discussion:
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